Instructions

ZOOM IN by clicking on the page. A slider will appear, allowing you to adjust your zoom level. Return to the original size by clicking on the page again.

MOVE the page around when zoomed in by dragging it.

ADJUST the zoom using the slider on the top right.

ZOOM OUT by clicking on the zoomed-in page.

SEARCH by entering text in the search field and click on "In This Issue" or "All Issues" to search the current issue or the archive of back issues
respectively.
.

PRINT by clicking on thumbnails to select pages, and then press the
print button.

SHARE this publication and page.

ROTATE PAGE allows you to turn pages 90 degrees clockwise or counterclockwise.Click on the page to return to the original orientation. To zoom in on a rotated page, return the page to its original orientation, zoom in, and
then rotate it again.

CONTENTS displays a table of sections with thumbnails and descriptions.

ALL PAGES displays thumbnails of every page in the issue. Click on
a page to jump.

Superfunds February 2015
1. GOALS AND OBJECTIVES FOR THE
SUPERANNUATION SYSTEM
The final report recommended that there be
broad political agreement regarding the objectives
of the superannuation system, and that these be
enshrined in legislation. Governments would then
be required to report to the community, on how
each policy they propose is in line with achieving
these objectives.
The report states that the overarching objective
for the system should be to provide income in
retirement to substitute or supplement the Age
Pension. It also recommends a set of subsidiary
objectives that range from helping people
build and manage their retirement savings, to
alleviating the fiscal pressures on government
arising from the retirement income system.
The call for such objectives to be set has been
widely welcomed by stakeholders, who say it will
improve policy consistency, and reduce system
complexity and costs. Enshrining these objectives
in legislation would also provide greater stability,
and help boost the community’s confidence in
planning for their retirement.
ASFA has also been supportive of this initiative,
and will work with the government to develop
measures in line with these objectives.
2. POST RETIREMENT
The report made a number of recommendations
to open up the post-retirement income stream
product market, in particular the removal of
regulatory impediments. This has been a long-
held advocacy position for ASFA. A flexible
regulatory environment is crucial if we want to
see innovation in the post-retirement space.
The report also recommended that trustees
be required to pre-select a comprehensive
income product for retirement (CIPR), with a set
of minimum features including a stable income
stream, a degree of longevity protection and the
flexibility to draw down on capital when required.
While it is not suggested that the take up of the
product be mandated, the report argues that such
an approach would help guide members towards
options that would provide them with better
overall outcomes in retirement.
These two recommendations must go hand in
hand. There is no ‘one-size-fits-all’ approach when
it comes to providing income stream choices for
retirees and, at present, with the limited range
of products available, it would be difficult for
trustees to select an option that would cater to
people’s needs.
As a starting point to help guide product
development and innovation, ASFA has identified
six types of potential income streams, which
can be classified into tiers to reflect the level of
flexibility, longevity protection and risk taken
by the member. Each tier fits differently into
the pension and social security system, and will
provide retirees with greater choice when it comes
to ensuring their financial security in retirement.
3. GOVERNANCE
The report also made a number of
recommendations relating to the governance
of the system including introducing a majority
of independent directors on trustee boards and
stronger penalties for directors who breach their
duties. A key part of this discussion going forward
will be the definition of ‘independent’. ASFA has
previously suggested a definition that reflects both
the Australian Securities Exchange and current
Superannuation Industry (Supervision) Regulations
definitions and it has recommended that there
be an appropriate transition period. If we are
to move towards a majority of independent
directors, then these two factors should be a key
part of any decision making in this area.
While the composition of boards continues
to be the most contentious area of debate, we
believe more focus should be given to the trustees
themselves, and whether they are the best people
for the job. ASFA’s long-held position has been
that superannuation trustee boards for funds, in
any part of the system, must have the flexibility
to appoint the right people, with the right skills,
knowledge and experience to deliver the best
outcomes for fund members. In addition, conflicts
of interest that limit a trustee’s ability to meet their
fiduciary obligations must be removed.
4. SYSTEM EFFICIENCIES AND FEES
The efficiency of the system and its impact on
the fees paid by fund members continues to be
a topic of fierce debate. While there is no doubt
efficiencies can be improved, both ASFA and
the report cited the fact that there are a number